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December, 2007

A Special LBM Journal Research Report

Builder/Remodeler Product Preferences: Find out what you can do to influence your key customers’ purchases in the areas of roofing, siding, windows, and insulation.

By Chris Donlan

In the summer of 2007, LBM Journal commissioned a special research report on product preferences by builders and remodelers in four specific categories: insulation, windows, siding, and roofing. The survey was designed to reveal what factors influence a customer’s brand preferences when selecting products from these categories, and to help LBM dealers understand how they can influence and help their customers select these products.

The Farnsworth Group, a market research and consulting firm specializing in the lumber and building materials industry, conducted the study, and interviewed 100 builders and 100 remodelers.

Specpan, a Farnsworth Group division that maintains a panel of more than 15,000 professional builders, remodelers, and construction industry professionals, conducted the survey online.

Builders interviewed included a broad range of custom, semi-custom and production homebuilders. The number of homes built by respondents ranged from a few homes to several hundred homes per year. Remodelers consisted of general contractors and self-classified remodeler professionals. Remodelers represented projects ranging from under $10,000 to more than $100,000.

This special research report revealed that brands, combined with the client’s demands, considerably influence which products builders and remodelers purchase and where those supplies are purchased.

LBM Dealers Remain a Key Source of Supply

One key result from the survey showed that lumber and building material dealers continue to be the primary source of supply for both builders and remodelers, with approximately 50% (in total) of their overall purchases of building supplies coming directly from LBM dealers.

However, despite the leading supplier position of LBM dealers, Home Improvement Centers (particularly Lowe’s and The Home Depot) are capturing about 22% of the market and this rate continues to climb steadily each year.

In order to fight this increasingly competitive trend, LBM dealers need to focus on satisfying the needs and meeting the expectations of key builder and remodeler market segments.

By ensuring that you have the products and brands which meet your customer needs, you will reinforce your company as the primary source of supply. In this study, builders and remodelers were asked to focus on four key building material categories and identify what they expect from their preferred brands.

What Drives Builder/Remodeler Satisfaction with the Products and Brands LBM Dealers Provide?

This research showed that a central point to keeping clients satisfied is to keep shelves stocked.

Builders and remodelers were asked what set their preferred brand apart from competitive brands and products. The respondents were asked this specifically for the brands they prefer within the key building materials categories of insulation, siding, windows and roofing.

The results show, on an unaided basis, six key attributes separated preferred brands from their competitive alternatives, regardless of the product or customer segment:

These are:

  • Availability
  • Quality product
  • Brand name recognition
  • Price
  • Customer service
  • Selection

The survey showed that both builders and remodelers felt that the key attribute of availability means having their preferred brand in-stock when, where, and in the right quantities to meet their needs.

Without focusing and delivering on these attributes, LBM dealers will be hard pressed to gain a high level of customer satisfaction.

In the second component of the study, builders and remodelers were asked to rate their preferred brand of product’s performance on a list of various prelisted attributes.

[Insulation]

For insulation products, brand satisfaction is strongly tied to quality and price, otherwise known as the "value equation.”

Value typically is determined by the price relative to varying quality levels. This doesn’t mean that builders or remodelers are looking for the lowest priced product, but rather, a quality product at a reasonable price to satisfy their respective project needs.

[Siding]

Although the "value equation” is still paramount with brand and product satisfaction for siding, the study revealed that other issues also take on significant importance, including product features and warranty issues. Of the categories studied, builders and remodelers both demand a higher level of performance on more attributes on siding than any of the other product categories.

It’s probable that this is due to the "exposure” that builders and remodelers have should product failure problems occur with siding.

[Windows]

The key drivers of brand satisfaction for windows show that "homeowner” related issues surface to a greater extent than for insulation or siding. "Adds value to the project” and "Brand valued by the homeowner” were both much stronger attributes for builders and remodelers overall brand and product satisfaction.

Still important however, are value, warranty, and feature/benefit attributes. This set of key drivers are most likely driven by the fact that for homeowners, windows are perceived as a "quality” differentiation on their project, whether for a new home or a major remodel/replacement project.

[Roofing]

Perhaps, as with windows, roofing can be viewed as a key product relative to the overall "aesthetics” or curb appeal of the home. Builders and remodelers are looking for products and brands that offer product specific features (i.e. style and color), high quality, and value options to the homeowner.

While this study reflects on only four major product categories purchased by builders and remodelers, it became clear through this research that these key LBM dealer market segments have very specific and varied expectations for the brands and products they prefer.

The successful LBM dealer must understand these key brand and product drivers, and rationalize their product and brand offerings to ensure satisfied customers who will, in turn, continue to provide the dominant share of their purchases to the LBM dealer.

With expertise in the home improvement, construction and building supply industries, The Farnsworth Group helps manufacturer and retailer/dealer clients to evaluate market performance, monitor changing market conditions, identify new opportunities and recommend strategy direction and adjustments. To learn more, call 800.394.5755 x132, or visit www.thefarnsworthgroup.com.

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